ELEMENTS. Definition. Approaches

Transcription

1 Cntracts PART IV ACCEPTANCE I ELEMENTS A Definitin Definitin: acceptance is an unqualified assent t the terms f an ffer. Any variatin is a cunter-ffer, and cnstitutes rejectin f the first. B Appraches There are tw pssible appraches t determining whether an ffer has been accepted. Cntinuing tensin between these views is exhibited by cntemprary case law: 1 Objective apprach Determined by the utward manifestatin f intentin in the cnduct f the parties 2 Subjective apprach Lk t the presence f actual cnsent by each party The favured apprach is bjective (Taylr v Jhnsn). Exam nte: develp an pinin abut the cnsistency f each apprach with the tenets f cntractual thery. Be prepared t evaluate each. C Reliance upn the Offer Unless a persn perfrms the cnditins f an ffer in reliance upn it, they d nt accept that ffer and the fferr is nt bund in cntract. Crwn v Clarke: Facts Clarke was invlved in the murder f tw pliceman A reward was ffered fr infrmatin leading t the arrest f the persns wh cmmitted the murder It was als annunced that a pardn wuld be extended t any accmplice wh prvided infrmatin leading t arrest Clarke was arrested fr murder; he was aware f the reward and the pardn, and he made a statement that led t the cnvictin f the murders Clarke received his pardn, but claimed t be entitled t the reward Issue Jaani Rirdan 2004 Page 1 f 8

2 Cntracts Did Clarke prvide the infrmatin with the intentin f clearing his name r receiving the reward? Nte that Clarke admitted that he had seen the reward ntice, but that he made the statement t the plice in rder t clear his name Reasning Clarke never accepted r intended t accept the ffer fr the reward Ordinarily, intentin is determined bjectively Hwever, a unilateral cntract f this type is an exceptin t the general rule The utcme wuld be the same if bjective: a reasnable persn in the psitin f the plaintiff wuld be mst cncerned abut clearing his name, s their intent wuld nt be t accept the ffer On the facts, Clarke s admissin in evidence reduces uncertainty abut his intentins Estppel culd nt be relied upn, because there was n reliance and n detriment Decisin The act alleged t be acceptance must be tied t the ffer Because Clarke s cnduct was nt related t the ffer, it culd nt cnstitute valid acceptance II METHOD OF ACCEPTANCE A General Rule A persn wh makes can ffer can stipulate a particular methd f acceptance. Any subsequent acceptance must cmply with such requirements in rder t be effective. Hwever, acceptance cannt be frced upn the fferee; eg, by stating that unless the fferr hears smething t the cntrary they will take the ffer as accepted (Felthuse v Bindley; uncle ffers t buy hrse frm nephew; presumes silence t be acceptance; n cntract). The current test that is applied is: wuld a reasnable bystander regard the cnduct f the fferee, including his r her silence, as signalling t the fferr that their ffer has been accepted? (Empirnall Hldings). Empirnall Hldings: Facts E retained M as a prperty manager After initial wrk had been cmpleted, M requested a prgress payment and a cntract fr the wrk perfrmed M was tld t submit a prgress claim but was infrmed that E s directr des nt sign cntracts Nevertheless, M send E tw cpies f a building cntract and requested the executin f the cntracts Wrk cntinued and prgress payments cntinued t be paid As n cntract had been signed, M wrte again t E stating that it was prceeding n the Jaani Rirdan 2004 Page 2 f 8

3 Cntracts basis that the cnditins f the cntract were accepted by E and that wrks were being carried ut in accrdance with thse terms Issue Was the cntract between E and M validly accepted? Reasning Silence is generally insufficient t cnstitute valid acceptance Hwever, cmmunicatin f acceptance is nt always necessary if ther circumstances indicate the ffer has been accepted Factrs t cnsider include: Custms f the prfessin r industry The particular curse f dealing Any previus relatinship between the parties This is a questin f fact The test t be applied is: Wuld a reasnable bystander regard the cnduct f the fferee, including his r her silence, as signalling t the fferr that their ffer has been accepted? McHugh J draws an analgy with the ticketing cases, where it was pinted ut (per Stephen J) that acceptance culd be inferred frm the fferee after a reasnable time fr rejectin f the ffer had passed but he did nt This case is unlike Felthuse, where there was n custm r previus dealing between the uncle and nephew Decisin On the facts, the express statement that the directry des nt sign cntracts shuld be taken t mean as an bjectin t the means f accepting a cntract, nt an bjectin t its terms There was valid acceptance The precise mment f frmatin culd be either when: Payments were made; r A reasnable time perid had elapsed since M s final letter t E Brambles Hldings: Facts Brambles managed the Cuncil s Slid Waste Dispsal Dept The riginal cntract between the parties established certain fees fr general cmmercial waste and prhibited brambles frm charging higher fees On 20 February 1990, the Cuncil wrte t Brambles saying it was apprpriate fr it t charge 1.1 cents per litre fr liquid waste dispsal (this amunt was higher than cntemplated under the riginal cntract) On 19 September 1991, the Cuncil wrte t Brambles explaining that it had reslved t increase liquid waste fees t 6 cents per litre, but that Brambles culd nly retain 1.1 cents On 3 Octber 1991, Brambles respnded by denying that the riginal cntract between them cvered liquid waste; it als expressed dissatisfactin with the 1.1 cents ffered by the Cuncil Hwever, frm this pint n brambles prceeded t charge liquid waste fees at 6 cents per litre In 1996, the Cuncil sued t recver the retained liquid waste fees (4.9 cents per litre) Jaani Rirdan 2004 Page 3 f 8

4 Cntracts Issue Was the ffer f the 19 September letter accepted? Reasning The Cuncil had t view the 19 September letter as cnstituting an ffer If they did nt, damages under the riginal cntract wuld be inadequate Thugh there wuld clearly be a breach f the initial cntract, there wuld als be n lss suffered by the Cuncil in Brambles cnduct f charging 6 cents per litre If the cntract wasn t breached, then the Cuncil wuld have received the same amunt f the fees Heydn JA: the ffer was accepted The ffer had been rejected (n 3 Octber 1991) and therefre culd nt be accepted Cntractual bligatins are nevertheless impsed because f the circumstances f this case Principle: if D had s acted that P was reasnably entitled t believe that D was assenting t the psitin asserted by P, D will be bund Supprt fr the ntin that everyday situatins are ften difficult t frmulate in terms f recgnised categries f ffer and acceptance, but that, nevertheless, the law is willing t recgnise a cntract A big picture apprach: takes int accunt previus negtiatins and agreements t infer acceptance Similar t the apprach f Empirnall and the ticketing cases B had time t reject the ffer indeed, they did d s bt they cntinued t accept the benefit, s their cnduct attracts cntractual liability They cllected precisely 6 cents and, in ding s, did exactly what the ffer said Ipp JA: the ffer was accepted Adpting a mre traditinal apprach, the ffer was nt rejected; Brambles simply expressed dissatisfactin with the current terms Refuses t reject the ffer/acceptance mdel Their cnduct amunted t an implied acceptance f the ffer (by charging the 6 cents per litre as specified in the letter) Decisin The Cuncil s ffer t charge 6 cents per litre (and retain 1.1 cents) was accepted and Brambles is liable in cntract t the Cuncil fr the additinal fees cllected Ntes The apprach f Ipp JA and Heydn JA d nt sit cmfrtably with the classical thery f cntract frmatin Clearly, Brambles did nt intend t be bund the terms f the letter f 3 Octber 1991 Typical bjective apprach nt necessarily all that different; issues f uncertainty reslved by reference t the appearance f cnduct t the reasnable bystander Discrepancies between inferred intent and actual intent are a necessary side effect f the use f bjective tests in cntract law B Pstal Acceptance Rule Jaani Rirdan 2004 Page 4 f 8

5 Cntracts In Tallerman v Nathan s Merchandise, Dixn CJ and Fullagar J nted that [t]he general rule is that a cntract is nt cmpleted until acceptance f an ffer is actually cmmunicated t the fferr, and a finding that a cntract is cmpleted by the psting f a letter f acceptance cannt be justified unless it is t be inferred that the fferr cntemplated and intended as his ffer might be accepted by the ding f that act. The time at which a cntract is frmed is when cmmunicatin f acceptance reaches the fferr (nt when cmmunicatin is sent). Hwever, sme exceptins have been recgnised t this general principle, such as the pstal acceptance rule (Brinkibn v Stahag). Brinkibn v Stahag Stahl: Facts The buyers (an English cmpany) sent a telex t Vienna accepting the terms f sale ffered by the sellers (an Austrian cmpany) The cntract was nt perfrmed and the buyers wished t sue the sellers The sellers bjected t the jurisdictin f the English curt, but the buyers wanted t sue in England Issue When was the cntract frmed? Was it frmed in England r Austria? Reasning The curts recgnise the pstal acceptance rule as an exceptin t the rule that a cntract is frmed when acceptance is cmmunicated t the fferr Nrmally: cntract nt cmpleted until acceptance f the ffer has been cmmunicated by the fferee t the fferr Of curse, this can be varied by the specific terms f the agreement This rule gives way t the express intentins f the parties, with sme exceptins (such as silence) Pstal acceptance rule: if it lks that parties intend psting a letter shuld indicate acceptance, then it ccurs when the letter is put int the mailbx and nt when it is received The pstal acceptance rule nly applies where parties intend psting a letter t be indicative f their acceptance Lrd Wilberfrce ntes that n universal rule can cver all situatins and that they are ultimately reslved by reference t the intentins f the parties (as bjectively determined frm their behaviur) Need t cnsider temprality as well as lcality Factrs that may justify departure frm the general apprach: The message is sent r received thrugh a third party Where it is sent ut f ffice hurs Eg, n the weekend Where it frms part f a negtiatin prcess that is knwn t be drawing t a clse, rather than unexpected acceptance Where it is nt intended t be read immediately Eg, where the fferr is abut t cmmence travel These are all factual questins; the utcme depends n which factrs Curt weights in its analysis, and hw it cnstrues the facts The riginal justificatin fr the pstal acceptance rule was that the risk that an acceptance wuld nt be delivered shuld lie with the fferr, wh allws (implicitly r explicitly) acceptance by methd f pst Jaani Rirdan 2004 Page 5 f 8

6 Cntracts Decisin?! Ntes The apprach des nt give adequate cnsideratin t the intentins f the parties as t which Curt shuld have jurisdictin ver the cntract The ffer/acceptance mdel appears very cntrived Perhaps it wuld be better t lk at where the negtiatins ccurred r where the wrk wuld be perfrmed r the services rendered Nte: the pstal acceptance rule des nt apply t revcatin. Where an ffer is revked by the fferr, it is nt effective until cmmunicated t the fferee. C Legislative Respnse Legislatin has been enacted t reslve uncertainty abut the time and lcatin at which acceptance f a cntract takes place. The Electrnic Transactins Act 2000 (Vic) prvides that: An electrnic cmmunicatin is despatched when it enters the first infrmatin system utside the cntrl f the sender: s 13(1) and s 13(2) If the infrmatin system is specified fr the purpses f cmmunicatin, the time f receipt is when the electrnic cmmunicatin enters that system: s 13(3) Similar t the pstal acceptance rule, where the fferr intends that an electrnic cmmunicatin culd cnstitute acceptance If the infrmatin system is nt specified fr the purpses f cmmunicatin, the time f receipt is when the electrnic cmmunicatin cmes t the attentin f the addressee: s 13(4) Similar t the general psitin that acceptance ccurs when the fferr is made aware f it III PROCEDURE A Order f Enquiry The fllwing analysis may be emplyed t determine whether there is a valid accessin t the terms f a cntract, and, if s, when and where it ccurred: 1 Was there an ffer? 2 Was the ffer revked? 3 Was there a cunter-ffer? 4 Was there cnduct capable f being regarded as acceptance? Jaani Rirdan 2004 Page 6 f 8

7 Cntracts 5 When and where did this cnduct take place, and what was its mde f cmmunicatin t the fferr? 6 If there was a delay between the fferee s cnduct and the fferr s receipt f acceptance, was the methd f cmmunicatin used bjectively intended t be used fr that purpse? If s, the pstal acceptance rule may apply If nt, acceptance ccurs when and where the cmmunicatin is received 7 What is the effect, if any, f the Electrnic Transactins Act 2000 (Vic)? 8 What is yur pinin n the validity f the cmmn law rules f acceptance and their applicatin t everyday circumstances? D the statutry prvisins adequately address ambiguity? 1 Advise Bris B Hypthetical Exercise 5 This requires a general cnsideratin f actins available t that party, and ptential barriers t recvery: a) Offer Offer is a willingness f a party t enter int cntractual bligatins Nt an invitatin t treat because it is nt uncertain r casual But, rather, she explicitly ffered t sell fr $4000 The relevant invitatin t treat is the advertisement b) Invitatin t treat There may have been an ancillary cntract in the frm f her prmise t keep the ffer pen Hwever, there is n cnsideratin fr the prmise, and therefre n cntractual bligatins Equitable bligatins may apply: reliance n representatin, lss f banking fees It may be pprtune t questin the requirement f cnsideratin and its impact upn the certainty f cntractual dealings c) Revcatin Revcatin: the pstal acceptance rule des nt apply t revcatin (nly acceptance) The time f revcatin is when B receives ntice (ie, Thursday) If B accepts befre Thursday, there has been valid acceptance f A s ffer d) Acceptance Jaani Rirdan 2004 Page 7 f 8

8 Cntracts Did A allw electrnic acceptance? Her business card, as it appears t the reasnable bystander (bjective apprach), seems t indicate yes, based n the inclusin f an address UNCITRAL: business card nt enugh t evidence an intentin t accept by e- mail The ffer was accepted at 3pm, which was when the fax/ was delivered t A s huse Regular business hurs: nt relevant, since nt running a business But: business address prvided n business card Nte Lrd Wilberfrce: n universal rule fr determining acceptance 2 Relevance f Letter, Hliday a) Letter Depends n whether pstal mail was allwed as a valid means f acceptance If psted n Wednesday, then A pstal acceptance rule wuld allw fr acceptance when the letter f acceptance was psted in the mailbx (n difference) If general rule applies, then acceptance wuld nt ccur until A receives the letter (ignring the ther mdes used by B t cmmunicate acceptance) b) Hliday Treating a business card as allwing the specified mdes f acceptance seems reasnable If an address is specified n the business card, it may be assumed that it will be checked during business hurs Hwever, nte the ECA prvisin nt acceptance until read by the fferr (A):s 13(4)1 Jaani Rirdan 2004 Page 8 f 8